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Monday, October 4, 2010

U.S.-South Korea Beef Dispute: Issues and Status

Remy Jurenas
Specialist in Agricultural Policy

Mark E. Manyin
Specialist in Asian Affairs

U.S. beef access to South Korea is one of the outstanding issues in the debate over the Korea-U.S. Free Trade Agreement (KORUS FTA). In 2003, South Korea was the third-largest market for U.S. beef exports, prior to the ban its government imposed after the first U.S. cow infected with mad cow disease, or BSE (bovine spongiform encephalopathy), was discovered. Some Members have stated that congressional consideration of, and support for, KORUS depends on South Korea fully opening its market to U.S. beef. Currently, South Korea allows imports of most U.S. beef products, except those from cattle older than 30 months.

On April 18, 2008, U.S. and South Korean negotiators reached an agreement on the sanitary rules that Korea will apply to beef imports from the United States. It allows for imports of all cuts of U.S. boneless and bone-in beef and certain beef products from cattle, irrespective of age, as long as specified risk materials known to transmit mad cow disease are removed and other conditions are met. Though the U.S. beef industry and U.S. policymakers welcomed this deal, Korean TV coverage and Internet-spread rumors that questioned the safety of U.S. beef resulted in escalating protests and calls for the beef agreement to be renegotiated or scrapped. U.S. officials countered that measures already in place to prevent the introduction of BSE in U.S. cattle herds meet international scientific standards. To address rising public pressure, the Korean government twice pursued talks with the United States to find ways to defuse these concerns without “renegotiating” the beef agreement. This culminated in the June 21, 2008, confirmation by both governments of a “voluntary private sector” arrangement that allows Korean firms to import U.S. beef produced from cattle only under 30 months of age. Both governments view this as a transitional step until Korean consumer confidence in the safety of U.S. beef improves.

Since the resumption of U.S. beef exports in July 2008, U.S. exporters have worked to recapture this key overseas market. Beef exports to South Korea in 2010 are well above last year’s level and may reach one-half of the 2003 level (in value terms). Though Australia is the main competitor, U.S. exporters have gained noticeable market share since the Korean market reopened to U.S. beef. Promotional efforts to rebuild consumer confidence in U.S. beef, aggressive marketing efforts by large store chains, and much lower retail prices for imported beef than for Korean beef account for the continued growth in U.S. beef sales.

On June 26, 2010, President Obama directed Administration officials to work with their Korean counterparts to resolve the beef and auto issues with South Korea by this November’s G-20 meeting in Seoul. He also stated that his intent is to present the KORUS FTA to Congress, likely in 2011. Administration officials have stated that their objective is “to eventually secure full market access for U.S. beef” that reflects South Korea’s recognition that the United States meets international scientific standards. More recent statements have raised the possibility that the Administration may not require achieving this objective before the KORUS FTA is sent to Congress, and instead may seek to secure commitments from South Korea to move in steps toward that goal. Bilateral discussions later this fall are expected to focus on the terms of, and the timetable for, South Korea’s moving to accept all U.S. beef shipments, irrespective of the age of slaughtered cattle, as laid out in the April 2008 agreement. Since this document is separate from the text of the KORUS FTA, it could be amended easily if both countries agree to changes. Korea’s position on the beef issue likely will be shaped by the memory of the size and intensity of the anti-beef agreement protests, which likely have eroded the Korean President’s willingness and ability to accept changes the Obama Administration may seek before submitting the KORUS FTA to Congress.

Date of Report: September 23, 2010
Number of Pages: 18
Order Number: RL34528
Price: $29.95

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